The Insurance Services Office (ISO) Commercial General Liability (CGL) Coverage Forms are extremely broad. They insure the bodily injury liability, property damage, and personal and advertising injury liability exposures of a variety of commercial businesses, enterprises, and ventures. Their broad nature eliminates having to select and group individual or specific hazards, with resulting potential gaps in coverage.
The ISO CGL Coverage Forms can be offered on either an occurrence or a claims-made basis, as a monoline policy, or combined with one or more other lines of insurance to form a commercial package policy. The named insured’s basic exposures that CGL coverage forms insure are:
- Ownership, maintenance, or use of the premises
- Operations conducted or performed on or off the premises
- Written contracts and agreements
- Products manufactured, sold, or distributed
- Completed operations
- Personal injury
- Advertising injury
- Medical payments on the premises or at jobsites, without regard to fault
- Each of these coverages is subject to certain definitions, exclusions, and limitations.
The eligibility criteria for either of the ISO CGL coverage forms is very broad and applies to all commercial exposures. Some limitations apply with respect to certain classes or exposures that are not eligible to be included in commercial package policies or for the package policy premium discount. However, there are no limitations on using the CGL coverage form itself. It is designed to respond to and meet the general liability coverage needs of virtually any commercial risk or class of business.
The 04 13 edition introduced a number of changes to CG 00 01 and CG 00 02, a significant change in many additional insureds endorsements and a number of other editorial changes. These changes could potentially result in gaps in coverage at renewal.
ISO COMMERCIAL GENERAL LIABILITY COVERAGE FORMS
Section I–Coverages provides three distinct coverages:
- Coverage A–Bodily Injury and Property Damage Liability
- Coverage B–Personal and Advertising Injury Liability
- Coverage C–Medical Payments
It describes each of these coverages with respect to the insuring agreement, exclusions, and supplementary payments that apply to them.
Section II–Who Is an Insured describes eligible parties that are considered insureds.
Section III–Limits of Insurance explains how each limit of insurance applies as well as how they work together and relate to one another.
Section IV–Commercial General Liability Conditions describes the specific conditions that apply to CGL coverage. Some of them involve the named insured’s responsibilities after a loss. Coverage is voided if one or more of these conditions are violated.
Section V–Definitions describes certain words and phrases used with and related to the coverage provided. They are different than the ones found in the dictionary and are very important because coverage can be given or taken away through a definition.
OCCURRENCE COVERAGE FORM VERSUS CLAIMS-MADE COVERAGE FORM
There are two ISO CGL Coverage Forms. CG 00 01 is the Occurrence Coverage Form. It covers liability or damage losses that occur during the policy period, regardless of when the insurance company is notified of the loss or claim. The key to this coverage approach is the date of loss or occurrence.
CG 00 02 is the Claims-Made Coverage Form. Coverage triggers by the actual filing date or receipt of the claim, in addition to the date of occurrence. It handles any claim filed during the policy period, regardless of the date of the occurrence, subject to the retroactive date on the declarations. While the retroactive date can be any date, it should be the first date that claims-made coverage applied to the risk, because an occurrence coverage form applies to occurrences that take place prior to that date. Claims-made coverage applies only to occurrences that take place after the retroactive date.
Monoline ISO Commercial General Liability Policies include the following forms:
- IL DS 00–Common Policy Declarations
- IL 00 17–Common Policy Conditions. This form contains the conditions common to most commercial insurance coverage forms. Its use is mandatory with most ISO monoline or multiline simplified policies.
- CG DS 01–Commercial General Liability Declarations
- CG 00 01 or CG 00 02–Commercial General Liability Coverage Form
- Policy Cover Page or Jacket. Individual insurance companies design this form for their own purposes. It may include a table of contents or index to meet the requirements of some states.
Various endorsements are available to tailor the ISO Commercial General Liability Coverage Forms. Some are mandatory and required for specific classifications and types of business. Others are optional and permit a standard form to be customized to meet a specific risk’s coverage needs. Endorsements broaden, restrict, delete, modify, or add coverage.
Underwriting commercial general liability coverage for a specific risk involves identifying and evaluating its exposures, classifying both the risk and those exposures, and then properly rating them. Each step in this process includes opportunities for error.
Commercial general liability coverage rating is prescribed in the ISO Commercial General Liability Manual. It is very specific but some of the details can be extremely confusing. The Commercial General Liability Rating Section gives general details on how to rate and also presents some in-depth analyses and examples.